EU new financial sanctions against Russia

Since 23 February 2022, the European Union continuously announces new sanctions against Russia and its ally Belarus in response to the Ukraine crisis which influence the financial market. The European Union already introduced sanctions in 2014 in connection with annexation of Crimea and events in Eastern Ukraine, but it has been significantly broadened.

It shall be prohibited to directly or indirectly purchase, sell, provide investment services for or assistance in the issuance of, or otherwise deal with transferable securities and money-market instruments issued after 9 March 2022. On the other hand, it shall be prohibited to directly or indirectly make or be part of any arrangement to make any new loans or credit. The measures concern to Russia and its government; the Central Bank of Russia; and any legal person, entity or body acting on behalf or at the direction of the entity referred to the Central Bank of Russia. Moreover, the EU prohibited the transactions related to the management of reserves as well as of assets of the Central Bank of Russia. It is prohibited to invest, participate or otherwise contribute to projects co-financed by the Russian Direct Investment Fund and it is not acceptable to provide state financing or financial assistance for trade or investment with Russia. From the previous provision, there are some exceptions such as food trade.

One of the main measures is that seven Russian banks (Bank Otkritie, Novikombank, Promsvyazbank, Bank Rossiya, Sovcombank, VNESHECONOMBANK (VEB) and VTB BANK) have been excluded from the SWIFT messaging system since 12 March 2022. Besides of that, the EU deprived Russia and its natural or legal persons from the euro as it is prohibited to sell, supply, transfer or export euro denominated banknotes and use them in Russia. This measure does not apply for the personal use of natural persons travelling to Russia or members of their immediate families travelling with them and the official diplomatic missions and similar. In addition, the acceptance of deposits exceeding €100,000 from Russian people is also prohibited. On the other hand, it is forbidden to sell euro denominated transferable securities issued after 12 April 2022 or units in collective investment undertakings providing exposure to such securities, to any Russian citizen or natural person residing in Russia or to any legal person established in Russia. Finally, the EU confirmed the common understanding that loans and credit can be provided by any means, so it is clear that the measures are concerned for crypto-assets as well. Moreover, the EU added additional persons to the list of persons, entities and bodies subject to restrictive measures.